Marina Bay with Suntec City and National Stadium and Kallang in the background.

10/08/2012

Big banks can gamble away your money

There were so many excruciatingly painful stories of gamblers gambling away everything and ended in deep trouble, and dragging their families along with them. And both the govt and NGOs are struggling to come up with more rules and regulations to keep the gamblers from trouble. The most notable thing is the self exclusion order, or family members can choose to exclude them with the same order. These are individuals that could do just so much harm to themselves and their loved ones.

What would happen if banks, financial and investment banks were to gamble with high stakes, with the depositor/investor/shareholders’ money? Any mess up means hundreds of thousands of people will be in deep shit. This is exactly the same problem with the ‘too big to fail’ banks in the last financial crisis. The govts had no choice but to rescue them using taxpayers’ money. And hopefully these rascal bankers would have learnt and stay away from high gambling using other people’s money. No, they are back at it, everyone of them.

I am really surprised to read in the BT today what Hsien Loong said about these big time gamblers while in New Zealand. Below are some of his comments:

‘The difficulty is that financial markets have variegated into all kinds of sophisticated activities, products, derivatives, investment activities, trading – and the banks are also in these….But the reality is that the gambling part is intrinsic to the financial system….Noting that central bankers and regulators are under a lot of pressure to split the deposit taking role of banks from the reckless and even morally doubtful part that many argue amounts to gambling with money….These were investment banks, risking their shareholders’ money. But they were all doing similar things, they were all getting sick at the same time and the govt had no choice but to go into it.’

What can I say? And these bankers knowing that the govt cannot do anything about their gambling activities, will go on crazily gambling away with OPM and demanding huge outrageous pay for doing that. And should they lose, they know that the govt will have to bail them out.

What kind of shit are these animals made of? Licensed to gamble and to break banks and destroy the savings of everyone coming into contact with them, having trusted them and putting their money with them? And better still, govts simply dunno what to do with them and cannot control their wild gambling streaks disguised as sophisticated investments!

My goodness, what is happening? No wonder all the banks and SWFs are happily gambling away.

In the good old days, your money is safe with the banks cause the banks don't take excessive risk and the central bank is willing and able to be the lender of last resort.

Now with the excessive risk taking, the bank pays you less than 1% to assume high credit risk. This does not make sense.

Now each bank you can perhaps get back 50,000 through insurance but if there is a general failure, I am not sure how the insurer will have the ability to pay everyone.

To be on the safe side, make sure you not only open as many bank accounts as possible but also all other types of safer assets like blue chips, AAA grade bonds,foreign currencies, gold and commodities and properties bought in sane time.

In the good old days, your money is safe with the banks cause the banks don't take excessive risk and the central bank is willing and able to be the lender of last resort.

Now with the excessive risk taking, the bank pays you less than 1% to assume high credit risk. This does not make sense.

Now each bank you can perhaps get back 50,000 through insurance but if there is a general failure, I am not sure how the insurer will have the ability to pay everyone.

To be on the safe side, make sure you not only open as many bank accounts as possible but also all other types of safer assets like blue chips, AAA grade bonds,foreign currencies, gold and commodities and properties bought in sane time.

Can blame the govt. They cannot understand what the gamblers in the banks/funds are doing. So it is best not to do anything. They don't even know what is happening to the stock market and the pathetic state it is in.

Well, so if you follow the politican's argument, when our banks (and even those foreign ones here) lose big on the next property market crash, LHL will volunteer taxpayers' money to bail them all out? It certainly would be Temasek who will end up holding the shares of every bank, but they would be toxic like nucelar wastes. Sure good for garmen who can then dictate our lives by withholding lending to those who don't support them, bad for taxpayers? Its our money right?

RB, there is a root cause and the politicans do not want to act on it because they get their money and support from the bankers too: once Saloman Bro went IPO in the 1980s, they started betting shareholders' money and not the partners' money, that was the turning point. Even Charlie Munger said so when he analyzed the reasons behind berkshire's failed investment in Salomon's, which was sold Saloman to Travelers, now Citigroup.

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